Surge Energy (SGY.TO and ZPTAF) Update - Feb 1

[dan_s]

The notes below were sent to me by Jessica, one of our oil & gas "experts" based in Calgary. Her detailed work led me to Kolibri Global Energy (KEI), ROK Resources (ROK) and Surge Energy (SGY). Our network of industry experts is a valuable part of the Energy Prospectus Group.
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Surge Energy – SGY – T < also trades as ZPTAF in the U.S.

Market Cap $931.97M/EV $1.26B
ZPTAF closed yesterday at $7.27US. My current valuation is $11.25

> Surge recently closed their 3,850/boepd of long life, water flooded assets from ERF. They have been chasing these assets for seven years.
> Increases production to 25,000boepd (87% liquids (and lowers their corporate decline to 23%
> This expands their asset base in their key areas in the Sparky and SW& SE Sask, which are rated two of the top four light oil plays in Canada
> Maintenance Capex $175M which will deliver $335M in operating cash flow @ $80WTI
> Increased their dividend from $0.44/year to $0.48/year, paid monthly
> Next dividend increase will likely come in Q3 when they meet their next debt target
> Not only are they very adept at M&A they also made two new pool discoveries last year
> They have 3 billion barrels of oil in place (BBOIP) which is only booked to 10.4% recovery, most of their core areas will delivery 20-35% recovery with water flood. Undiscounted, every 1% change in recovery factor will add $3BIL in NPV
> Expect the company to continue to provide excellent well results as they continue to drill the top performing wells in SE Sask
> SGY is the only company of their size with best leverage to oil prices and their market cap only needs to increase by $400M for index inclusion

[dan_s]

Jessica has convinced SGY and ROK to host luncheons for EPG in Houston in April. She's working on KEI to host a luncheon in May.

InPlay Oil (IPOOF) is also going to host a luncheon for us in April.

[moke]

Thanks Jessica...